Washington: How might the pandemic change the home-sharing landscape? This question hits a little too close to home for my liking, as I've spent much of my quarantine begrudgingly living in the cheapest short-term rentals I could find. It's given me a not-so-luxurious vantage to watch the market leader, Airbnb, stumble through issues ranging from optional cleaning protocols to angering many of its 700,000 hosts over changes to its refund policies.
Making Airbnbs my full-time residence was, of course, not what I'd envisioned for 2020. Months before such phrases as "social distancing" and "flatten the curve" were lodged in my lexicon, my partner and I had sunk much of our savings into our move to Berlin. We'd sold most of our furniture, stowing a few antiques and keepsakes in a small storage unit. Then a mere four days before we were to turn over the keys of our Portland, Ore., apartment, the European Union announced the closure of its borders to nonresidents, instantly canceling our plans and leaving us without a place to live.
We decided to float for several months on our credit cards, hopping between a few Airbnb rentals that had become more affordable as demand dried up. In that time, I've seen the platform built on connections with locals pivot to close-to-home isolation - a shift from its "belong anywhere" messaging to "get away, without going far," as a recent Airbnb app notification read.
No plan B for hosts
While the tech company, which received a $1 billion cash infusion in April, can quickly refocus its operations, many of the hosts who helped drive Airbnb's growth don't have an easy Plan B. With mortgages to pay and properties sitting vacant, they're now struggling to survive.
At the outset of the pandemic, the numbers looked bleak across the board. In March, European short-term rental reservations had dropped by as much as 80%, and revenue was down by more than 50% in American urban destinations like New York City, San Francisco and Seattle, according to data from analysts at AirDNA. By April, Airbnb's valuation had taken a nosedive to $18 billion, nearly half of its previous high of $31 billion. And in May, chief executive Brian Chesky announced the company was laying off 25% of its workforce.
Major news outlets were quick to question whether Airbnb and competitors like Austin-based Vrbo and Portland start-up Vacasa could weather the storm. But researchers think the concern may be overblown for Airbnb, which has cash reserves and a near-monopoly on the U.S. vacation rental market. "I think it makes for a good headline, but when you look at their fundamental business model, there's still a demand for the product," says Makarand Mody, assistant professor at Boston University's School of Hospitality Administration. Recently, Mody has been researching the key decisions that might make a traveler choose to stay at an Airbnb over a hotel. He believes the platform may have a leg up on the lodging competition.
Cleanliness is the obvious concern for travelers, with both hotels and rental companies emphasizing their new rigorous cleaning standards. In my searches, I've seen hosts getting clever, too, advertising their sanitation routines and offering hand sanitizer to guests. Some health experts are giving short-term rentals an edge since you can more easily avoid crowded indoor spaces. "In a hotel, it's inevitable that you'll have more interactions than at an Airbnb," Thomas Russo, chief of the infectious-disease division at the University at Buffalo, recently told MarketWatch.
The sheer diversity of the short-term rental market, in terms of rental type and location, is proving to be its competitive advantage during the pandemic, Mody says. "Geographically, Airbnbs are so much more spread out [than hotels]," he tells me. "It allows you more control over the environment you're in."
The principle of Airbnb's "Go Near" campaign seems to be resonating with cooped-up road-trippers. In March, AirDNA reported that the coronavirus was causing a boom for remote Airbnb properties, despite dismal performance in more urban areas. Bookings had rebounded by late May, seeing a 20% year-over-year increase. While new bookings across rental companies have again trended downward from a mid-June peak, driving-distance getaways remain a hot commodity. Of the one million nights that Airbnb guests booked on July 8, more than two-thirds were for destinations outside of cities, according to the company's own data.
"Single home rentals are generally perceived as a safer option for avoiding airborne viruses," Tom Caton, co-founder of AirDNA, wrote in an email. Caton's team has found that beachside destinations, mountain towns and lakeside getaways have led the national rebound, with states such as West Virginia, South Dakota, Oklahoma, Arkansas, Wyoming and Delaware seeing the biggest boost.
"Airbnb is much quicker to understand what's happening with customers, what's happening with the environment and pivot toward these opportunities [than hotel companies are]," Mody says. "Essentially. Airbnb is a tech company and they use data so much better. They're extremely nimble and that's been one of their strengths all along."